BlackRock’s iShares Reclaims Top Spot in ETF Inflows

By Brendan Conway

After trailing the Vanguard Group for two years, BlackRock’s (BLK) iShares grabbed the biggest share of new money in exchange-traded funds last year.

BlackRock’s ETF unit vaccuumed up $60.6 billion of the industry’s record $191 billion total U.S. inflows during 2012, capped by a $13 billion surge in December. That’s according to Morningstar (MORN) data released Monday.

Vanguard was number two in new U.S. ETF money in 2012, pulling in $52.7 billion. State Street Global Advisors (STT) was third, with just under $40 billion. About half of State Street’s money went into the SPDR S&P 500 ETF (SPY), the world’s largest. Most of that $20 billion arrived during December.

When it comes to overall assets, BlackRock is still well ahead of the pack. Its $556 billion in assets under management made up 42% of the market as of year end. State Street is number two at $329 billion, or 25%, with Vanguard coming in third at $246 billion, or 16%.

Goldman Sachs (GS) analysts led by Marc Irizarry tell clients this morning that they like what they see in BlackRock’s ETF flows, noting that the firm took in more than $85 billion globally when it comes to exchange-traded products. As they commented on BlackRock’s global ETF business:

These numbers show BLK’s ongoing leadership position in the ETP market, with implied 14% organic growth on nearly $600 bn of 2011 AuM, and the recent fee cuts/marketing campaign suggest BLK still has room for growth in the ETF market. BLK trades in line with slower growing peers (14x BLK/industry average), despite premium expected flows (GSe: 6% 2013E). In our view, shares will re-rate as iShares and the rest of the BLK product line continue to grow while peers concentrated in active products face growing flow pressure. BLK last close $218.03.

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Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.